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Tuesday, April 18, 2017

Q&A:- What is Behind Raising the Interest Rate in America?

Question: On
15/3/2017, the Chair of the US Federal Reserve, Janet Yellen, announced that
the Federal Open Market Committee decided overnight to raise the interest rate
by a quarter of a percentage. This is the second time that the interest rate
has been raised within three months, and it was noted that it will be raised
twice later this year ... It is known that raising interest (usury) means the recovery
of the economy, but the US economy is still suffering from crises, so how can
this be explained? Thank you.

Answer: US
interest rates were reduced to almost zero during the 2008 financial crisis,
and remained so for seven years until December of 2015, when Yellen also
pointed to raising interest rates (usury) for several times during the year
2016, but the implementation of raising interest rates (usury) has failed, and
only the interest (usury) rate at the end of the year was raised, and to
understand the reasons to raise interest rates (usury) or reduce them we say
the following:

1- The purpose of
determining the interest rate (usury) that is put in practice through the
decisions to buy and sell US Treasuries is to determine the monetary policy,
especially knowing the availability of currency in US markets, and this is
necessary for two main reasons:

·Because
the lack of currency in the market if the interest rate (usury) is high, it
will slow economic growth, because people do not get to borrow from banks
because of the increase in interest rates (usury).

·Because
the increase in the cash currency in the market if the interest rate (usury) is
low, it leads to inflation, due to increased cash supply in the markets because
of the demand for borrowing due to lower interest rates (usury).

2-Since
2015, Yellen has said that the interest rate (usury) needs to be raised,
because the long-standing economic recession in America is over, and economic
growth is improving, and raising interest rate (usury) now is better than
raising them after inflation starts. This is Yellen’s economic philosophy to
raise interest rate (usury).

3- This argument is
unconvincing, because the US economy is still weak, but American and even Western
monetary policy is tied to the decisions of politicians, and not based on
purely economic factors as it should be, and the decisions of the US Federal
Reserve should also be independent of Government policy, but the reality is
that the decisions on interest rates (usury) are merely political and are
according to political and economic requirements. The seven governors of the US
Federal Reserve are appointed by the US President and are approved by the
Senate for a period of fourteen years, And the chief and his deputy from within
the Board of Governors existing is appointed by the President of the United
States for four years, and they can be reappointed during their term of office
several times as desired by the US President.

4- In practice, the decision of the US
monetary policy is affected by political factors; one is local, the other
global:

·At
the local level, US presidents want to develop the US economy strongly at
election time, because a strong economy would support the re-election of the
president or the candidate of his party.

·At
the global level, America is competing vigorously with the economies of other
countries, and at this time the economies of the world are still weak due to
the effects of the global economic recession in 2008. Interest rates (usury) in
Europe and Japan were about zero, raising interest rates in the United States
will lead to a massive influx of funds towards America, which could have
catastrophic effects on the economies of other countries!

5-Raising
US interest rates (usury) now would be painful for other global economies,
though not as much as last year. The New York Times reported on 9/3/2017, the
following on Europe: Raising interest rates (usury) officially could be far away
for years, the European Central Bank has left the interest rate index (usury)
unchanged, saying it will continue the stimulus measures to buy government
bonds and corporate bonds until the end of the year, albeit at a low level as
of next April.

6- China has realized America's intention to
raise the interest rate (usury) to harass Europe and withdraw capital to it, so
it raised its interest rate (usury) in conjunction with the American increase
to prevent the escape of Chinese funds for the raised interest in America, and
to participate in attracting European funds, so China was forced to announce
the increase in the interest rate (usury) immediately after the issuance of the
US decision. This is according to a report published on 16/3/2017 on the Bloomberg
website entitled "People's Bank of China raises borrowing costs in
conjunction with the Federal Reserve." The Chinese Central Bank raised
borrowing costs because the stable economy and the revival of factories allowing
the following of the Federal Reserve when it tightens its policy.

7- In conclusion, raising
the interest rate in America is not due to the recovery of the US economy, but
rather to bring capital from Europe to get a higher interest rate than that in
their countries, which is about zero. The purpose is therefore not only
economic but also to weaken Europe, pushing it into crises leading to its
dismantling.

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